Pandora Slashes Full-Year Forecast

RAPAPORT... Pandora has lowered its revenue expectations for the third
time this year following a disappointing quarter, and will implement a new program
to cut costs.

The Danish retailer had an “unsatisfactory” third quarter,
with global sales down 4% year on year to DKK 4.98 billion ($761.5 million). The
retailer has therefore reduced its full-year revenue-growth outlook to between
2% and 4%, from the earlier range of 4% to 7% it announced last quarter. At the
beginning of the year, it predicted growth of between 7% and 10%.

Charms performed relatively weakly, with buyers choosing to
place fewer items than in the past on Pandora’s iconic Moments bracelets. Other
jewelry categories recorded growth, the company said. Revenue in the US fell
12% in local currency, while sales in the wider Americas region decreased 6%.
Profit for the period plunged 30% to DKK 951 million ($145.4
million).

Pandora will implement “Programme Now,” a plan for improving
and streamlining its business and reducing costs throughout the organization. The
company will significantly reduce its acquisitions of franchisees, and launch
fewer new stores than it had originally intended, it said. The jeweler will
only open locations in key market areas where it has room to grow, including
China, India and Latin America.

The company will instead focus on growing its e-commerce
presence, it noted. Sales on Pandora’s e-commerce platform increased 52% year
on year for the third quarter, comprising 8% of the company’s total revenue, up from 5% a year ago.

“We have reviewed our business and decided to launch a
forceful program with the aim to materially reduce costs across the company to
free up resources,” said chief financial officer Anders Boyer. “At the same
time, we have to lift Pandora to the next level of maturity, operating as a
more unified global company. We have taken the first major step in the program
today by changing our network-expansion plan.”

The current efforts are in addition to the DKK 350 million
($53.5 million) cost reductions the company announced in August, when it also
slashed nearly 400 jobs.

The retailer is still searching for a replacement for CEO
Anders Colding-Friis, who left the company in August following weak second-quarter
results.

Pandora will use the rest of 2018 and 2019 to “reset the
business,” Boyer added.